Ground Rents Income Fund PLC Unaudited Net Asset Value at 30 September 2017 (1253U)

TIDMGRIO

RNS Number : 1253U

Ground Rents Income Fund PLC

20 October 2017

Ground Rents Income Fund plc

(the "Company")

Unaudited Net Asset Value at 30 September 2017

Ground Rents Income Fund plc (LSE: GRIO), a listed real estate investment trust (REIT) investing in UK ground rents, announces its unaudited Net Asset Value ("NAV") as at 30 September 2017.

Highlights:

   --     NAV per ordinary share of 131.7 pence as at 30 September 2017 (31 March 2017: 138.35 pence) 

-- Diluted NAV per ordinary share of 130.2 pence as at 30 September 2017 (31 March 2017: 135.31 pence)

The unaudited NAV per share as at 30 September 2017 was 131.7 pence. This represents a decrease of 4.8% from the unaudited NAV of 138.35 pence per share at 31 March 2017.

The decrease in the NAV reflects the reduction in the independent portfolio valuation by Savills Advisory Services Limited ("Savills") as at 30 September 2017.

The NAV is in line with the Directors' View expressed in the 31 March 2017 unaudited NAV announcement on 12 June 2017. The Directors expected a reduction in the valuation of the portfolio of approximately GBP5.5-6.0 million, which would have reduced the NAV to approximately 132 pence per share, with the diluted NAV reducing to approximately 130 pence per share.

The Directors are of the view that the valuation as at 30 September 2017 takes full consideration of the market conditions over the last six months and reflects the underlying value of the portfolio as at 30 September 2017.

Savills' market commentary:

"Under VPGA 10 (Valuation Practice Guidance Applications) of the RICS Valuation Global Standards 2017 we are required to bring to your attention "Matters that may give rise to material valuation uncertainty".

GRIO will be fully aware of the Government consultation paper - "Tackling unfair practices in the leasehold market" which covers a number of issues which could affect demand and the operation of the ground rent investment market. GRIO have been fully engaged in this process and have submitted its own response to this paper. Until the Government decides on a course of action there is now valuation uncertainty for some ground rent types.

For clarity, there continues to be an active market for less onerous review types, such as RPI linked ground rents, but there is a material change in the perception of investment quality for investments with aggressive review patterns, leasehold houses and those with ground rents which are high in comparison to the property's capital value. Some investors have either reduced their bids for these assets or withdrawn from buying them altogether.

GRIO's portfolio has only limited exposure to this type of asset and so the valuation uncertainty is reduced. Nevertheless, some market uncertainty exists and reference to VPGA 10 is appropriate."

Breakdown of NAV movement

A breakdown of the change to the unaudited NAV per share calculated under International Financial Reporting Standards ("IFRS") for the period from 1 April 2017 to 30 September 2017 is set out below:

 
 Net assets per unaudited interim             GBP129.2m 
  accounts as at 31 March 2017 
 
 Profit for the period 1 April 2017             GBP1.7m 
  to 30 September 2017 (H2 2017) 
 
 Revaluation loss plus costs of acquisition   (GBP5.0m) 
 
 Issue of ordinary share capital                GBP3.3m 
  - exercise of warrants 
 
 Dividends paid during H2 2017                (GBP1.8m) 
 
 Net assets as at 30 September 2017           GBP127.4m 
 

The net asset values and diluted net asset values are calculated under IFRS and are unaudited. The NAV per share is calculated using 96,712,100 ordinary shares of 50 pence each, being the number in issue on 30 September 2017. The diluted NAV per share is calculated using 4,718,273 warrants, being the number in issue on 30 September 2017.

Contacts:

 
 Ground Rents Income Fund 
  plc 
                                   020 7499 
 Simon Wombwell (Director)          6424 
 
 Brooks Macdonald Funds Limited 
                                   020 7659 
 James Agar (Director)              3454 
 
 N+1 Singer (Broker) 
                                   020 7496 
 James Maxwell / Liz Yong           3000 
 
 Tavistock (Media) 
                                   020 7920 
 Jeremy Carey / James Whitmore      3150 
 
 Appleby Securities (Channel 
  Islands) Limited 
 Kate Storey / Danielle Machon     01481 755600 
 

This announcement is released by Ground Rents Income Fund plc and contains inside information for the purposes of Article 7 of the Market Abuse Regulation (EU) 596/2014 ("MAR"), encompassing information relating to the NAV described herein, and is disclosed in accordance with the Company's obligations under Article 17 of MAR.

For the purposes of MAR and Article 2 of Commission Implementing Regulation (EU) 2016/1055, this announcement is being made on behalf of the Company by Simon Wombwell, Director.

END OF ANNOUNCEMENT

This information is provided by RNS

The company news service from the London Stock Exchange

END

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October 20, 2017 02:00 ET (06:00 GMT)